It's one thing to read about cost segregation in the abstract. It's another to see what the numbers actually look like on a real property. This walkthrough takes a single-family rental and shows exactly how a cost segregation study changes first-year depreciation and first-year tax savings, using real numbers you can follow end-to-end.
The punchline up front: on a $400,000 rental with a typical reclassification and 100% bonus depreciation, the study generates roughly $46,000 of additional Year 1 deduction and about $14,800 of additional Year 1 tax savings at a 32% bracket. The flat-fee cost of the study is a small fraction of either number.
Here's how we get there.
The property
- Property type: Single-family rental
- Purchase price: $400,000
- Land value: $80,000 (20% of purchase price)
- Building basis: $320,000
- Acquired and placed in service: 2025 (after January 19, 2025)
Without a study: standard 27.5-year treatment
Under standard MACRS treatment, the full $320,000 building basis is depreciated over 27.5 years.
- Year 1 depreciation: $320,000 ÷ 27.5 = ~$11,636
- Same amount every year for 27.5 years
With a cost segregation study
A study reclassifies eligible components into shorter recovery periods. For a typical single-family rental, a meaningful portion of building basis often qualifies:
| Asset class | Examples | Basis reclassified |
|---|---|---|
| 5-year property | Appliances, carpet, window treatments, fixtures | $32,000 |
| 15-year property | Driveway, landscaping, fencing, exterior lighting | $16,000 |
| 27.5-year (remaining) | Structural building components | $272,000 |
| Total building basis | $320,000 |
Year 1 depreciation with 100% bonus (OBBBA, acquired after Jan 19, 2025)
The One Big Beautiful Bill Act (signed July 4, 2025) permanently restored 100% bonus depreciation for property acquired after January 19, 2025. Short-life components qualify for full first-year expensing.
| Component | Basis | Year 1 treatment | Year 1 deduction |
|---|---|---|---|
| 5-year property | $32,000 | 100% bonus | $32,000 |
| 15-year property | $16,000 | 100% bonus | $16,000 |
| 27.5-year property | $272,000 | Standard MACRS | $9,891 |
| Total Year 1 | $57,891 |
Year 1 comparison
- Standard treatment: $11,636
- With cost segregation + 100% bonus: $57,891
- Additional Year 1 deduction: ~$46,255
At a 32% marginal rate, that acceleration could represent roughly $14,800 in additional first-year tax savings. At 24%, approximately $11,100.
Important context
- This is acceleration, not elimination. Larger early deductions reduce what's available in later years. The total depreciation over the life of the asset is unchanged.
- Depreciation recapture applies at disposition. Your CPA should model the full lifecycle, not just Year 1.
- Actual reclassification percentages vary by property. Furnished rentals, renovated properties, and properties with more site improvements typically show higher short-life percentages.
- Bonus depreciation elections and state conformity are the CPA's call.
The ROI on the study itself
In this example, the additional Year 1 tax savings at a 32% rate (~$14,800) substantially exceeds the flat study fee — often by a wide margin for properties with meaningful basis.
Your CPA can run a quick projection before ordering to confirm the math works for your specific situation.
How the process works
- Submit core property details: address, purchase price, placed-in-service date, land value estimate
- Provide supporting documents if available (appraisal, settlement statement, photos)
- Receive a complete report with component-level classifications, allocated basis, and bonus depreciation applicability analysis
Reports typically delivered in 2 business days with a final quality check included.
To see what the numbers look like on your own property, use the free cost segregation calculator. When you're ready, start your study.